GCC employers paying an expensive price for health insurance

In response to the survey, the Gulf-based participants reported significantly higher costs — 6.0 per cent of payroll — than those from either Eastern or Western Europe (3.9 per cent and 3.3 per cent respectively

Te cost of providing employee health benefits for companies in the Gulf is considerably higher than for those located In the rest of the EMEA (Europe, Middle East and Africa) region, according to a recent report published by Mercer Marsh Benefits. The information was revealed in the organisation’s bi-annual EMEA Health Care Survey which, for the first time, included data from companies operating in the UAE and Saudi Arabia.

In response to the survey, the Gulf-based participants reported significantly higher costs — 6.0 per cent of payroll — than those from either Eastern or Western Europe (3.9 per cent and 3.3 per cent respectively). The figures compare with the U.S. where the comparable survey found 13 per cent of total payroll costs are spent on healthcare.[2] The report’s authors say that the reason for this disparity is because of the nature of the medical insurance schemes on offer in the region as well as how healthcare is delivered there.

“Health insurance benefits are far more comprehensive in the Gulf because of the expatriate demographic[3],” said Steve Clements, Employee Health & Benefits Leader for the Middle East at Mercer. “The schemes on offer reflect the customary practice of providing generous expatriate-style benefits and allowing employees to receive treatment not only within the country, but also within GCC (Gulf Cooperation Council) countries and even in Europe and the U.S.,” he added.

“The issue is exacerbated by an open access system whereby there is often no gatekeeper to access care or direct patients to the most appropriate care pathways and providers. This can result in very high utilisation of health insurance plans. Overlay this with a rapidly developing capability to provide (expensive) treatments for complex medical conditions and you very quickly have a major cost pressure. Medical inflation rates here are also considerably higher than in Europe or the US, meaning that if current trends continue, the cost to businesses of providing employee health insurance could become unsustainable,” he added.

One significant finding from the EMEA Health Care Survey was that Gulf employers are increasingly adopting more sophisticated approaches to cost management using data analytics to target their strategies and taking a more holistic approach towards disease prevention, early detection and targeted intervention to deliver better returns on investment. On top of traditional private medical plans and individual health screening, companies are focusing on offering onsite clinics, employee assistance programs, online health education and risk assessment tools to identify their workforce’s health. The report’s authors say that this joined up strategy is being implemented to ensure a healthier, more engaged and more productive workforce, as well as having a direct impact on reducing the cost of health insurance claims.

“Employers are increasingly recognising the role of good health [4]as not just an employee benefit, but as a tool to improve workforce productivity through greater engagement, motivation and productivity,” said Clements. “Numerous case studies have shown that investing in preventative employee health and wellness programmes can produce a healthy return on investment. Forty per cent of overall respondents in our survey indicated that they are most likely to invest in wellness programs to reduce health risks and enhance productivity. This is just one of the approaches that employers are adopting to prevent people from getting sick,” he added.